Do I need income protection insurance?

How long could you meet all your regular expenses if your salary stopped or your income was halved? Would it be a year, six months, a month?

What sacrifices would you have to make? Would it be little things like birthday presents, or would you have to sell the car, or even the family home?

43% of males and 39% of females over the age of 15 suffered a serious injury or illness over the ten years from 2002 to 2011.1 The result for many Australians is not being able to work and earn an income for extended periods of time.

And for some, the hits keep on coming. 10.2% of males and 8.9% of females experienced a serious injury or illness twice from 2002 to 2011. Worse still, 10.5% of males and 8.9 of females experienced it three times or more.2

Some of us have more on the line if we become unable to work due to injury or illness.

Income protection insurance can provide up to 75% of your monthly pre-tax income, up to $10,000 per month.* Depending on your insurer and your policy, you can choose the percentage of your wage you will be paid, the waiting period before your payments start, and how long you will receive payments.

Income protection insurance might be for you if:

You rely on your income to pay bills, keep a roof over your family's heads and put food on the table

You would struggle to meet financial commitments using savings alone, or would like to protect your savings against this sort of impact

You are self-employed or own your own business

You could be injured or become sick in a situation where worker's compensation is not applicable

Income protection insurance for the self-employed

The ability to generate an income is everyone's most valuable asset, but the self-employed may have more at stake than your average worker.3 You have invested heavily in your business and may have taken on personal debt to do so. Your business undoubtedly relies on your work to be successful4 and any absence from work could hit you and your family hard.

If you are self-employed with a fluctuating income, some income protection policies can be tailored to suit your individual financial needs. Keep in mind that insurers will generally need you to provide evidence of your income when you claim, and they will generally look to your tax records to confirm that you are earning a taxable income.

Your own business relies on you. If your capacity to work drops due to sickness or injury, income protection can help you protect everything you've achieved already.

Worker's Compensation, Medicare and private health insurance are no substitute

Accident or illness outside of work - even if it affects your ability to work – is generally not covered by Worker's Compensation insurance. While Medicare and private health insurance help cover the costs associated with medical treatment and recovery services5 neither assist with income lost due to incapacity.

Worker's Compensation, Medicare and private health insurance are no substitute for income protection insurance.

No one depends on me, so I don't need income protection insurance

Your expenses might be lower than if you had a family, but they won't just go away.

Income protection insurance allows you to determine the percentage of your wage you will be paid within specified limits, the waiting period before your payments start, and how long you will receive payments. If you only have a few financial obligations, you could opt for a lower level of cover and save on premiums. If you are sick or injured you will be able to maintain your financial independence without having to rely on family or friends, or selling assets to make ends meet.

The cost of cover

When selecting your level of cover, you should consider your average monthly expenditure on essentials - rent or loan repayments, education expenses, bills, and the cost of managing investment assets (such as rental property upkeep). Your premium will vary with the agreed maximum payout length, your earned wage, personal details (including age, gender and occupation) and the selected waiting period, among other factors.

This is general information only and does not take into account your personal objectives, financial situation or needs. You should consider the relevant PDS available on this website prior to purchasing any product. Choosi offers insurance products from a range of brands but does not compare all products available in the market.

* Subject to a maximum of 75% of your monthly pre-tax income at the time of claim.

Receive Latest News Updates

Choosi Pty Ltd (ABN 15 147 630 886) offers insurance products from a range of Australian brands. Choosi does not provide information, or offer cover, for all products available in the market and there may be aspects to some products that we do not compare. Choosi is not an insurer and cover is issued by various underwriters. Your use of this website is undertaken in accordance with the full Terms and Conditions.

Where requested by you, we can provide access to other Life, Income Protection and Funeral Insurance brands by referring you to a third party partner. The Home & Contents and Car Insurance products available are issued and distributed by Compare the Market Pty Ltd (ABN 83 117 323 378, AFSL 422926). The Business Insurance products available are issued and distributed by BizCover Pty Ltd (ABN 68 127 707 975, AR 338440), an Authorised Representative of Mega Capital Pty Ltd (ABN 37 098 080 418, AFSL 238549). If you choose to purchase these products we will refer you to the appropriate partner. If you purchase a product as a result of a referral, we will receive a fee or commission, depending on the partner you are referred to.

Choosi has commercial relationships with all insurers that are available for comparison. Choosi obtains a commission from the insurer for arranging any insurance you choose to buy.

Information on this website does not take into account your personal objectives, financial situation or needs. You should consider the relevant Product Disclosure Statement (PDS) for more information and to ensure the product suits your needs. The PDS for each of the pet insurance, life insurance, income protection insurance, funeral insurance, and final expenses insurance products sold through Choosi are available through this website. Relevant PDSs and/or Policy Wording Documents for products available through our partners are available on their websites.